PawSox asking for $38m subsidy for team only worth $11m

The owners of the Pawtucket Red Sox are asking the city of Pawtucket and state of Rhode Island for $38 million in public money so they can build a new stadium to replace historic, 4.5-star-Yelp-rated McCoy Stadium, which means they need to explain why they can’t just build the damn thing themselves. As part of that mission, the team gave the state senate figures on Wednesday showing that they have net equity in the team of $11.2 million:

The current PawSox owners have never disclosed how much they paid the Mondor family to buy the team in 2015, but The Boston Globe has reported the price was more than $20 million.

“We are a small, stable, but declining business,” PawSox Chairman Larry Lucchino and Vice Chairman Mike Tamburro wrote in a letter to the committee. “Nonetheless, in our opinion, the business is unsustainable over time if we continue operating at McCoy Stadium and declining trends continue.”

This is one of the core strategies in the stadium playbook, of course: Crying poor and insisting that the only way forward to profitability is to receive taxpayer cash. Which sort of makes sense, until you think about it and realize two things:

  • This is pretty much saying that the goal of a new stadium is to use public funds to put more money in the pockets of a private business, which, while certainly true — it’s our book’s subhead, after all — is maybe not the best argument here.
  • If you’re asking for $38 million for a team that’s only worth $11 million — or, to be generous, $20 million if you figure the sale price is a better representation of the team value than just net assets on hand — maybe it’d be cheaper for Pawtucket just to buy the damn team and forget this stadium nonsense, huh?

And while we’re on dubious arguments, the Pawtucket Foundation, a pro-development business group that strongly backs a new stadium, hired University of Michigan economist Mark Rosentraub to study the project’s revenue potential, and he determined it would generate enough revenue for both the team and the public “to enjoy positive returns on their investments.”

Reading the actual study shows the math behind Rosentraub’s conclusions, which is not exactly robust: He assumes that the team would leave without a new stadium, and then attributes all income and sales taxes paid at the stadium to the team’s presence, even though the substitution effect means that much of that money would be collected even if the PawSox relocated, as Rhode Islanders would spend their entertainment dollars on something else. (Rosentraub indicates his calculation assumes that all PawSox fans would just drive to Worcester to see games, which, uh, sure.) Plus, he counts money from tax revenues generated by additional development the team would build around the ballpark, but doesn’t indicate whether that would soak up housing demand that would otherwise lead to construction elsewhere in the state, or if the housing could just be built without the stadium (or the stadium subsidies) anyway, and … you get the idea.

Rosentraub is an inneresting character, as Neil Young would say: He wrote a book on the ill effects of stadium subsidies shortly before Joanna Cagan and I started working on Field of Schemes, but has since then carved out a lucrative career as a consultant who’ll say nice things about your stadium project for the right price. His change of heart, according to the Providence Journal, was prompted not by his own paychecks but by the realization that “demographic changes have drained cities of people and new tax-generating opportunities,” which, uh, Mark? The Great Inversion? Millennials? Any of this ring a bell?

Friday roundup: A’s pollution woes, Falcons roof woes, Hansen email woes, and more!

Whole lot of news leftovers this week, so let’s get right to it:

  • It’s not certain yet how serious the environmental cleanup issues at the Oakland A’s proposed Peralta Community College stadium site are, but anytime you have the phrases “the amount of hazardous materials in the ground is unclear” and “two possible groundwater plumes impacted by carcinogens” in one article, that’s not a good sign. Meanwhile, local residents are concerned about gentrification and traffic and all the other things that local residents would be concerned about.
  • There’s another new poll in Calgary, and this time it’s Naheed Nenshi who’s leading Bill Smith by double digits, instead of the other way around. This poll’s methodology is even dodgier than the last one — it was of people who signed up for an online survey — so pretty much all we can say definitely at this point is no one knows. Though it does seem pretty clear from yet another poll that whoever Calgarians are voting for on Monday, it won’t be because of their position on a Flames arena.
  • The Atlanta Falcons‘ retractable roof won’t be retracting this season, and may even not be ready for the start of next season. These things are hard, man.
  • Nevada is preparing to sell $200 million in bonds (to be repaid by a state gas tax) to fund highway improvements for the new Las Vegas Raiders stadium, though Gov. Brian Sandoval says the state would have to make the improvements anyway. Eventually. But then he said, “I just don’t want us to do work that has to be undone,” so your guess is as good as mine here.
  • Pawtucket is preparing to scrape off future increases in property tax receipts for a 60- to 70-acre swath of downtown and hand them over to the Pawtucket Red Sox for a new stadium, an amount they expect to total at least $890,000 a year. Because downtown Pawtucket would never grow without a new baseball stadium, and there’s no chance of a shortfall that would cause Pawtucket to dip into its general fund, and nobody should think too hard about whether if minor-league baseball stadiums are really so great for development, this wouldn’t mean that property tax revenues should be expected to fall in the part of the city that the PawSox would be abandoning. Really, it’ll all be cool, man, you’ll see.
  • Somebody asked Tim Leiweke what he thinks of building a new stadium for the Tampa Bay Rays for some reason, and given that he’s a guy that is in the business of building new stadiums, it’s unsurprising that he thinks it’s a great idea. Though I am somewhat surprised that he employed the phrase “Every snowbird in Canada will want to watch the Toronto Blue Jays when they come and play,” given that having to depend on fans of road teams to fill the seats is already kind of a problem.
  • The study showing that spending $30 million in city money on a $30-million-or-so Louisville City F.C. stadium would pay off for the city turns out to have been funded by the soccer team, and city councilmembers are not happy. “There’s something there that someone doesn’t want us to find,” said councilmember Kevin Kramer. “I just don’t know what it is.” And College of the Holy Cross economics professor Victor Matheson chimed in, “I expect for-profit sports team owners to generate absurdly high economic estimate numbers in order to con gullible city council members into granting subsidies.” I don’t know where you could possibly be getting that idea, Victor!
  • Congress is considering a bill to eliminate the use of federally tax-exempt bonds for sports facilities, and … oh, wait, it’s the same bill that Cory Booker and James Lankford introduced back in June, and which hasn’t gotten a committee hearing yet in either the House or the Senate. It has four sponsors in the House, though, and two in the Senate, so only 263 more votes to go!
  • A Miami-Dade judge has dismissed a lawsuit charging that the sale of public land to David Beckham’s MLS franchise illegally evaded competitive bidding laws, then immediately suggested that the case will really be decided on appeal: “I found this to be an extremely challenging decision. Brighter minds than me will tell me whether I was right or wrong.” MLS maybe should be having backup plans for a different expansion franchise starting next season, just a thought.
  • The New York Times real estate section is doing what it does best, declaring the new Milwaukee Bucks arena to be “a pivotal point for a city that has struggled with a decline in industrial activity,” because cranes, dammit, okay? Maybe somebody should have called over to the Times sports section to fact-check this?
  • And last but not least, Chris Hansen is now saying that his SoDo arena plan missed a chance at reconsideration by the Seattle city council because the council’s emails requesting additional information got caught in his spam filter or something. If that’s not a sign that it’s time to knock off for the weekend, I don’t know what is.

This week in boondoggle vivisection: Plenty of good seats available in SF, Cleveland, Ottawa

We’ll get to the weekly news roundup in a minute, but first, I need to mention this editorial from yesterday’s Globe and Mail, which makes several eminently reasonable points about how Calgary shouldn’t capitulate to the Flames owners’ extortion attempts for arena cash (“using past bad decisions to justify terrible future decisions does not qualify as logic,” “arena financing is a hamster wheel, and here is an opportunity to jump off”), and then says this:

Everyone involved should take note of a remark this week by Neil deMause, renowned stadium boondoggle vivisectionist and creator of the fieldofschemes.com website: “The number of mayors who’ve been voted out of office for standing up to sports team subsidy demands remains zero.”

That’s right, I am a major-newspaper-certified renowned boondoggle vivisectionist, y’all. Clearly it’s time to order some new business cards.

Okay, the rest of the week’s news:

  • The Los Angeles Rams aren’t the only California team having trouble getting fans to turn out for games in the September heat: The San Francisco 49ers are seeing so many empty seats on the sunny side of their stadium that they’ve hired architects to see if it’d be possible to add a sun shade. One problem: The stadium can’t get any taller, as it’s in the flight path of San Jose’s airport. Until then, the 49ers are handing out free water bottles and sunscreen to fans on the hot side of the stadium, which is nice and all, but probably isn’t what you want for your big marketing push. This once again points up how smart the 49ers management was to stick fans with PSLs before the team got lousy and people noticed how crappy the new stadium was for actually watching football in.
  • And speaking of empty seats, the Cleveland Indians won their American League–record 22nd straight game yesterday, but they still can’t sell out their ballpark, which not that long ago saw a record sellout streak of 455 straight games. Indians GM Mike Chernoff blamed Cleveland’s small size, the start of the school year, and “weekdays,” three things that apparently didn’t exist in the ’90s. At least he didn’t blame the 23-year-old stadium or demand upgrades as a solution — yet, anyway.
  • And also speaking of empty seats, the Ottawa Senators have begun tarping over part of their upper deck for every game, because they can’t sell tickets there. The Senators owner is already blaming his 21-year-old arena for that one (apparently the last owner built it in the wrong place), so team president Tom Anselmi was left to say: “We just need more of us to come to more games more often.” Can’t argue with that!
  • And also also speaking of empty seats, the 2018 Pyeongchang Winter Olympics have only sold about 5% of available tickets so far to actual fans (ticket brokers have bought up another 18%), with less than five months to go before the games start. If you’re looking to snap up a bargain to watch curling, though, be forewarned: Not all the new hotels planned for the Olympics are finished yet.
  • And speaking of seats that a team hopes won’t be empty, the Oakland A’s will be letting in fans for free to a game next April against the White Sox. Make jokes all you want about how dismal an A’s-White Sox matchup will be, it’s still free baseball, and you never know what you might see that you’ve never seen before.
  • NHL commissioner Gary Bettman declared that that the scaled-down Nassau Coliseum is “not a viable option” for the New York Islanders, two weeks before the team is set to present plans to Nassau County for a new arena near Belmont Park. A total coincidence, I’m sure.
  • The Rhode Island state senate started hearings on a new Pawtucket Red Sox proposal yesterday, with the team owners and their allies noting that “the team’s 54-percent share of stadium costs is the highest portion of private investment in 14 AA and AAA ballparks built over the last decade,” according to the Providence Journal. What was that someone was just saying about using bad decisions to justify terrible future decisions?
  • Deadspin’s Drew Magary has come up with a new nickname for the Atlanta Falcons‘ new iris-roofed stadium: Megatron’s Butthole. Drew Magary needs to be put in charge of all stadium nicknames, starting immediately.

Friday roundup: Everybody still has lots of dumb stadium ideas, sun keeps rising in east

And aside from the Cleveland Cavaliers arena subsidy returning from the dead, Mrs. Lincoln, here’s how some of the rest of the week in stadium and arena news went:

  • Chicago is looking at closing some streets to accommodate DePaul University’s new city-subsidized basketball arena, because of course they are.
  • The new arena for the Detroit Red Wings and Pistons will have a Kid Rock-themed restaurant, because of course it will.
  • San Diego mayor Kevin Falconer wants to build a professional lacrosse stadium, even though the owners of the city’s newly created lacrosse franchise say they don’t need one, because of course he does.
  • Rhode Island state senate president Dominick Ruggerio says he hopes the state legislature will vote on $38 million in public funding for a new Pawtucket Red Sox stadium in November, despite not believing the team has a viable threat to move to Worcester if it doesn’t get what it wants, because “You know what, we’ll get criticized for anything.” And you know, he’s got a point: No matter what elected officials do, there’s somebody somewhere who won’t like it, so might as well do whatever they want, right?
  • The Las Vegas Raiders’ stadium construction could be delayed because nobody realized until now that they needed Army Corps of Engineers approval to remove a flood culvert. (The Raiders have agreed to pay the $1 million cost, at least.)
  • Dave Zirin at The Nation has examined how Joel Osteen’s dithering over whether to let Hurricane Harvey evacuees into his megachurch has its roots in the Houston subsidy deal that turned the Rockets‘ old arena into the church in the first place, and I put in a cameo to note that while littering the landscape with redundant current and former sports venues is one way to create a lot of hurricane shelters, it’s probably not a very cost-effective one.
  • Wells Fargo released a report that “real stadium construction spending” on new sports facilities has “climbed 80 percent over the past five years” to $10 billion per … something. And are they counting money committed, or actual construction money spent, and does this count both private and public funds? I guess we should cut Wells Fargo some slack, they have a lot on their minds these days.

Worcester mayor: Do whatever it takes to land PawSox (but this doesn’t mean, like, subsidies)

The sports move-threat game requires two elements, or really three: 1) a league with monopoly control over franchises, so that losing a team means it’d be tough to recruit a replacement; 2) a semi-viable city to threaten to move to; and 3) city officials there willing to start a bidding war for your team. The first is easily met by most North American sports leagues, the second for most minor leagues (since the bar for “semi-viable” is so much lower), and the last, in the case of the Pawtucker Red Sox, has a willing volunteer in Worcester Mayor Joseph Petty, because man, just listen to this guy:

“The City Council does hereby support in principle the relocation of the Red Sox Triple A baseball team to Worcester including building a stadium to accommodate this team and further, request the City Manager do all that is reasonably in his power to facilitate this move,” Mr. Petty wrote in a proposed resolution the council will take up Aug. 15.

In an interview Monday night, Mr. Petty said the resolution is meant to show the Red Sox Triple A affiliate that the city and its people are enthusiastic about professional baseball returning to the city.

“We have a chance to get them here, and we just want to convince them Worcester is the place to be,” Mr. Petty said.

“All that is reasonably in his power”! Does that include “fire and fury“?

The mayor said the statement is not meant to imply financial backing for a stadium from the city. He said any discussion of funding or stadium location would be premature since the two sides have not even commenced negotiations.

Of course not! “Including building a stadium” would never imply spending public money to build a stadium, because that would just be silly! Besides, the mayor was directly asked about public money and responded with this firm statement:

“We’re not going to negotiate in the press,” Mr. Petty said when asked whether he supported the idea of public dollars going toward a deal.

It’s unclear whether the city council will go along with Mayor Petty’s proposal — one councilor, Konstantina B. Lukes, told the Worcester Telegram she was worried not only by the blank-check nature of the resolution but that “we may be the bride left at the altar after we’ve been courted,” which is a perfectly cromulent fear. But man, is Petty ever going for Cartoon Blowhard Mayor of the Year. I don’t know when Joe Quimby is up for reelection, but he could face a tough challenger here.

No, I don’t think the $38m PawSox stadium subsidy plan is a “win-win,” here’s why not

Joe Nocera, late of the New York Times op-ed page, has a new Bloomberg View opinion piece up titled “You Can Pay for a Ballpark Without Fleecing Taxpayers,” which namechecks this site and even provides a link, for which I should be grateful. Nocera and I failed to connect before it was published, though (he emailed me, I didn’t respond in time), so instead he is going to get berated here for misrepresenting my perspective, because that’s just how I like to bite the hand that feeds me clicks.

Anyway, here’s Nocera’s nut graf, where he brought me into the story:

In searching “Field of Schemes,” the go-to website for news about sports stadiums, I came across a rather different story, about the efforts of the Pawtucket Red Sox, the Triple-A minor league affiliate of the Boston Red Sox, to get a new ballpark. Although the dollars are far smaller (though not so small for Rhode Island), it does show that a team and a government can put together a deal that includes public financing but doesn’t hose the taxpayer. It’s kinda heartwarming, actually.

From there, it goes into a long, accurate description of former owner James Skeffington’s demand for $60 million in stadium subsidies, threatening to move the team out of Rhode Island if he didn’t get them. And then a long, not quite as accurate description of how after Skeffington’s death, team part-owner Larry Lucchino asked again for only $38 million in stadium subsidies, where the “city and state would receive a revenue stream that would not only cover the debt service but would probably make it a profitable venture for the government,” and “there were no threats” to move the team.

Okay, couple of things here. First off, the only revenue stream that the city and state will receive is “tax revenue generated in and around the stadium” — i.e., money that the city and state would normally collect anyway, but which would now be siphoned off to help pay for stadium construction costs via a tax increment financing district. There’s no way to reasonably project how much the TIF fund would collect — these things have failed spectacularly before — and more to the point, this is regular old tax money, not any actual revenues that the team would be giving up to help repay the public’s debt.

Secondly, about that “no threats” thing — not only did Lucchino just last week say he was going to look into moving the team out of Rhode Island, after promising two years ago not to do so until 2020, but Nocera actually linked to my post on that in his article. So, WTF, Joe?

Anyway, if Nocera wants to opine that the new PawSox deal is a better one for the city than the old one, it’s his column. (And he’s certainly right that it’s a better deal than Miami got for the Marlins stadium, though there are bank robberies that were better deals than that one, so that’s a pretty low bar.) But for the record, I would never call the new Pawtucket stadium plan a “win-win” — more of a “well, at least we got them to knock a few million dollars off their ridiculous subsidy demands, even if they’re still threatening to move Worcester.” Sadly, that’s a less grabby headline, but I’ll go with what I’ve got.

PawSox threaten to move just two years into five-year pledge not to threaten to move

Twenty months after promising not to move the Pawtucket Red Sox for at least five years in order to do “a repair job” on “wounds that were suffered by fans,” the team’s owners are back threatening to move the team:

“For more than a year, the Pawtucket Red Sox have worked cooperatively and exclusively with the City of Pawtucket and the State of Rhode Island to find a long-term solution to keep the PawSox in Pawtucket. The club promised such exclusivity through the state’s regular legislative session ending in June. This understanding was clear and made public on numerous occasions.

“While the dialogue with Pawtucket and Rhode Island officials will continue through a fall session, if called, the club will now also respond to other cities who seek to present proposals for potential ballpark sites. Given the uncertainty we face upon the expiration of our lease, and the timetables involved with these sorts of projects, we believe it is prudent and fair to follow this course of action.”

Now, I’m sure that the PawSox owners will claim that they’re sticking to the letter of their promise — even if the team were to move or try to, a new stadium elsewhere most likely wouldn’t be ready until after that five-year date in 2020 — but let’s be real: What’s going on here is that the Rhode Island state legislature wasn’t showing much urgency in approving its share of $48 million in requested subsidies, and team execs are hoping the threat of Worcester will light a fire under them. It’s a traditional part of the stadium-grubbers’ handbook, and “We don’t want to consider moving, but we have no choice” is a traditional “non-threat threat” way of presenting it.

So how realistic is the threat? More so than if this were a major-league team, if only because there’s no shortage of cities big enough to play host to a Triple-A franchise. So far there have been only “back channel” communications between the PawSox and Worcester, so presumably they haven’t started talking actual monetary figures — which, again, is in the team’s interest, because “Worcester is interested in us, better give us whatever we want!” is a much more effective threat than “Here’s what Worcester is offering us, can you match it?” Especially if Worcester doesn’t come up with a ton of cash, either. I’m not sure where “Get your customers to bid against themselves, it saves time” falls in the Rules of Acquisition, but I’m sure it’s in there somewhere.

Bucks unveil tarpaulins covering new arena construction, and other Friday must-see news

And away we go with another weekly round of micro-news that shouldn’t be allowed to slip through the cracks:

RI officials won’t vote on $38m PawSox subsidy demand yet, they have real work to do, okay?

I neglected to mention last week that the Pawtucket Red Sox had revealed the projected costs for their proposed new stadium, and it would be roughly $45 million from the team, $23 million from the state of Rhode Island, and $15 million from the city of Pawtucket. (The Providence Journal uses higher numbers because it adds up all principal and interest payments over time, which is stupid for the same reason it’d be stupid to add up all your mortgage payments over 30 years to describe the cost of your new house.) But you can forget all that for now, anyway, because the PawSox stadium plan appears to be going nowhere fast in the state legislature:

“The Senate has not received any legislation from the Governor’s office or the Pawtucket Mayor’s office,” [State Senate President Dominick] Ruggerio said in a statement. “At this point, it is too late in the session for a thorough, public review of a proposal of this magnitude. Should legislation be forthcoming, I am not opposed to reconvening in the fall to consider it in a deliberative and public manner.”

House Speaker Nicholas Mattiello had reacted coolly to the PawSox’s latest stadium proposal, indicating it wouldn’t get House consideration unless related legislation was introduced at the request of Governor Gina Raimondo.

“Speaker Mattiello is not putting a deal before the House Finance Committee that was negotiated by the governor, as the chairwoman of the Commerce Corporation, without her endorsement and her stamp of approval,” Mattiello spokesman Larry Berman, said in a statement Tuesday. “The speaker finds it highly unusual that the governor is unwilling to endorse a financial plan that she and her team negotiated. The stadium is a significant taxpayer investment, and with the governor sending mixed signals, it is likely too late in the session to initiate a proposal of this magnitude. The House Finance Committee has a great deal of other work to do.”

Oof — declining to take action on a requested stadium subsidy is one thing, but saying “We have a lot of other work to do, don’t bother me”? That’s cold.

To their credit, Rhode Island legislators appear to recognize that they have no good reason to throw a bunch of money at the PawSox owners, especially when the owners have promised not to threaten to move until 2020 to heal “wounds that were suffered by fans” the last time they threatened to move. Coming up next, probably: More threats to move. This doesn’t seem to be working out too well so far for Larry Lucchino and his fellow owners, but remember, they only have to win once.

RI officials talk a lot about new PawSox stadium plan, don’t say much of anything

In the wake of Rhode Island’s governor saying she might be okay with spending as much as $35 million on a new Pawtucket Red Sox stadium, several politicians in the state spent yesterday backing away from any such thing, including the governor herself:

House Speaker Nicholas Mattiello, D-Cranston, insists any legislative package involving state financing of a new stadium must arrive with Gov. Gina Raimondo’s stamp of approval.

“I have no bill. I have no legislation. No proposals. No nothing,” he said Wednesday afternoon. “I just got their press packet today …. I will look at it in my leisure, which I have none. It’s not my issue.”

And:

Although [Gov. Gina] Raimondo on Tuesday and again on Wednesday afternoon rattled off multiple reasons why she concludes the proposal appears to “pay for itself,” “would be self-supportive,” is a “much better, much more reasonable proposal than last time,” her spokesman Mike Raia insisted Wednesday morning that “The Governor did not endorse the deal or throw her support behind it, as [The Providence Journal] reported.”

Raimondo did say that the latest team proposal (which, as Mattiello noted, isn’t really a formal proposal) is better than the team’s previous one, something that Senate President Dominick J. Ruggerio echoed. But for now, this looks like lots of “we want to do something for the team, but we’re not going to make any commitments until we see which way the winds are blowing” posturing, which is about right for this stage of the game. Though “you’re not going to get a dime of public money until you can show clear and unassailable public benefits” works too, maybe somebody might want to try that?